Alberta Chapter President on The Inverted Pyramid of Successful Startups

Emmet McGonagle

July 21, 2022

Mark Mitchell, Alberta chapter president at Valhalla Private Capital, principal and director at Red Thread Ventures and managing partner at Weave VC, has claimed that his experience with pattern recognition has uncovered an “inverted pyramid” of founder-focused errors during the pitch process.


Discussing “how to invest in early stage companies in Western Canada” with Tyler Chisholm, host and founder of Collisions YYC on episode 168 of the Current & Critical podcast, Mark claimed that many deals which he passed on previously had “similar characteristics” around the “crispness” of their offering.


Mark explained: “The offering just isn't crisp enough to really understand why they're deserving of raising money at that valuation. It's not really mature enough, and what I mean by that is maybe the story just doesn't make sense - there's still some holes in the narrative or the problem isn't really well defined. 


“There's a lot of companies at that foundational layer where there's still things to work on before they can really separate themselves from the pack and raise that first round of capital,” Mark continued, “and as you go up the amount of companies becomes less, so there's an inverted pyramid.”


Likewise, Mark argued that an entrepreneur’s ability to “resonate” with investors during a pitch can be pivotal to their success.


“When you hear the pitch from our perspective,” Mark began, “it's obvious when they need more time to really fill some of those holes.


“The holes are just, ‘what's the real narrative for an investor to get excited about investing now, not in five months when you get customers?’”


Mark continued: “There has to be real evidence that you have to have some kind of traction that separates you from the pack of companies that are all at that stage, because a lot of companies are raising money at very similar valuations. 


“Unless you've broken out from the pack you should continue working on really solidifying that case or investment,” he concluded.


On a previous episode of the Current & Critical podcast, Randy Stewart Thompson – chairman of Valhalla Private Capital, managing director of Old Kent Road Financial and co-owner of Peterborough United Football Club – outlined how not to become Silicon Valley.


Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page.

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